The Size of Your World is the Depth of Your Consciousness

Saturday, January 29, 2011

China, America, Japan & Malaysia_World Economics

When China (the world's largest producer) curbed supplies of rare earth minerals to Japan (the world's largest user) the price of rare earth increased 7x. That was June 2010. China controls 97% of the world's rare earth elements production.

Without rare earth we would not be able to produce iPods, iPads, tinted glass, goggles, medical equipment, laser beams, missile defense systems, weapons --- the list is endless. You can do without gold, but rare earth has no substitute.

China is now holding 970Billion worth of US treasuries (debt). Tim Geithner US Treasury Secretary is now in Davos campaigning so that countries will keep on buying and will not liquidate US Treasuries. Ouch, wouldn't like to be in his shoes.

This week Standard & Poor, the US rating agency downgraded Japan's sovereign rating to AA- (the 4th highest level). Japan has faced economic recession for the past 2 decades. The paradox is that the Americans themselves have a budget deficit of 2-over trillion dollars and yet America has a triple A credit rating! Go figure!

The theme of our discussion is economic strength. China has it.
Nowadays I don't know about America. I'm sure they know how to take care of themselves. What about Malaysia?

The key factors driving global economic progress today are rare earth elements, commodities, food, and oil and gas. This is a fact.

Malaysian commodities are doing well what with the price of rubber products and palm oil increasing. For how long?

Oil and Gas has been big for Malaysia, with Petronas and all. But our supplies are running low. And because the world now wants clean energy ,what we actually need to produce is natural gas.

So how do we get natural gas? From coal-bed methane, sandstones, methane hydrates, and shale. The technology involved with drilling shale is horizontal drilling and hydraulic fracturing.

Using this technology, and according to the (US Energy Information Administration) EIA Annual Energy Outlook 2011, the US has 2.552 trillion cubic feet of potential natural gas resources. From this 828 trillion cubic feet is natural gas from shale resources and this amount of shale gas can last the US for 110 years.

Where is Malaysia on this score? What do we do about all that???

Oil field services sector is slated for phenomenal growth because these companies are needed for expertise in drilling for shale gas. Who are the top such companies? Schlumberger, Halliburton. Both from the US of A.

Why do I care about this? Call it national pride. I want to be proud to be Malaysian.

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